econ Chapter 3

econ Chapter 3 - Chapter 3 Supply and Demand What, How, and...

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Chapter 3 Chapter 3 Supply and Demand Supply and Demand What, How, and For Whom? What, How, and For Whom? WHAT: Which good will be produced? How much of each? HOW: Which technology? Which resources are used? FOR WHOM: How to distribute?
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Central Planning v. Market Central Planning Decisions by a few individuals or small groups The Market Buyers and sellers signal wants and costs Interaction of supply and demand answer the three basic questions ________ economies use both the market & central planning Buyers and Sellers in the Market Buyers and Sellers in the Market Market: a group of buyers and sellers of a particular product. Two sides: Buyers want to benefit from the good Sellers want to make a profit Market price balances The value buyers derive from the good The cost to produce one more unit of the good
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Demand Demand Quantity Demanded ( Q d ): The quantity buyers are willing and able to purchase at a specific price. Demand curve is downward sloping P high, Q d low P low, Q d high Two interpretations Horizontal Vertical Q P Demand for Pizzas (000s of slices/day) Demand Slopes Downward Demand Slopes Downward Higher prices drive some buyers out of the market. Reservation price : the __________ price an individual is willing to pay for a good. Higher prices cause remaining
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This note was uploaded on 04/14/2009 for the course ECON ECON 1 taught by Professor Foster during the Spring '08 term at UCSD.

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econ Chapter 3 - Chapter 3 Supply and Demand What, How, and...

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